The cybersecurity industry had a better-than-expected Q4 and gave positive guidance that has the group moving higher. While industry leader Palo Alto Networks is leading the group regarding share price and market action, others present attractive opportunities. Among them are Crowdstrike (NASDAQ: CRWD), Cloudflare (NYSE: NET) and Palantir (NYSE: PLTR), which offer unique solutions to common problems. The takeaway is that analysts' sentiment is firming for these stocks and has them bottoming.
The next step in the progression is a reversal that could happen with the next round of earnings reports. Cloudflare and Palantir are scheduled to report Q1 results in the first week of May, while Crowdstrike won’t report for another month.
Crowdstrike On Brink Of Reversal
Crowdstrike specializes in cloud, workload, threat intelligence and cyber-attack response services. The company reported a beat and raise quarter for Q1 that sparked a round of analyst upgrades and price target increases that earned the stock spots on Marketbeat’s Top Rated, and Most Upgraded Stocks lists. The 40 analysts rating this stock have it pegged at a Moderate Buy with a price target of $173, and both are firming. The price target is about 36% above the recent price action and well above the trigger point for a rally.
Piper Sandler analysts Rob Owens, who has an Overweight rating and above-consensus price target for the stock, had this to say following the investor day event, "the session largely reiterated our key thesis points for the name, which we continue to view as a top security consolidator with strong unit economics and a long runway for growth across multiple markets.”
The stock hit bottom well before the Q1 report and now shows a Vee-Bottom. The market is struggling with resistance at the $133 level, which could turn this into a Head & Shoulders or even cap gains. A move above the $133 and the 150-day moving average would trigger buying that could get the stock up to the $150 level. Assuming this move is accompanied by good news relating to the business or economy, the rally may sustain upward momentum and move on to higher highs.
Institutions Are Buying Cloudflare
The institutional activity in these stocks is bullish but none more so than Cloudflare. The institutions have been buying at a pace of 2:1 compared to selling and have total ownership up to 70%. This has put a bottom in the stock and set it up for a rally driven by results. The last report included a top and bottom line beat, although it was tempered by cautious guidance. The takeaway is that momentum was present, and the company is investing in growth product development that should drive shareholder value over the long run.
The analysts are also helping the stock to bottom and see about an 18% of upside. The latest activity has the sentiment at Hold with a price target of $67, and both have begun to firm after the last year’s downtrend. The $67 target is above recent resistance and may trigger buying if crossed.
Palantir Gives Robust Guidance
Palantir is the ugly duckling in the cybersecurity world, having started as a government-oriented service that has since opened its offerings to the public. AI drives its threat management tools and help to attract partners like Microsoft (NASDAQ: MSFT). The analysts were iffy about the guidance but issued several price target increases and upgrades that have the sentiment and consensus target firming. The $9.64 Marketbeat.com consensus figure is about 20% above the price action and above recent resistance.